EURUSD: Shifting The Trend To Bullish

By - Feb 06, 2016, 8:06 PM CST

Monthly time frame

The "big picture" for the EURUSD from the July 2008 top is bearish (Sequence of lower highs/lows)

There is a potential Head & Shoulder with a measured target at 0.79 although in order to achieve the measured target price has to breach the lower trend line of the channel that has been formed since the 2008 top and the trend line from the March 1985 bottom

However last week rally could shift the shorter term trend from bearish to bullish (Central Planners now want a weaker USD)

It is still early in the month to draw a conclusion from the monthly candlestick. Two key levels to watch are: The 10 mma = 1.0994, which hast not been reclaimed since July 2014 and R1 = 1.1213 where the EURUSD has failed 7 times since March 2015.

Above 1.1213 we have R2 (August high) at 1.1712 and R3 at the 0.5 retracement of the decline from the May 2014 high and the neckline of the assumed Head & Shoulder in the range of 1.2227

From the December 6 higher low, after 8 weeks of a sideways move the EURUSD has finally breached the trend line resistance from the August peak and it has reclaimed the 50 wma (First time since June 2014). So now we have a new sequence of higher high/low, hence the weekly time frame trend is now up

Price has failed to breach the R1 = 1.1213 at the first attempt but if the 50 wma = 1.1016 holds odds should favor a move towards R2 = 1.1442

Weekly oscillators are aligned with higher prices ahead: The RSI(14) has a positive divergence, it has reclaimed the 50 line and it has marginally breached the August peak; The MACD has a bullish signal cross in force since December

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